Opinion of the European Central Bank of 26 January 2001 at the request of Portuguese Minister of Finance concerning two draft decree-law concerning (I) the dual circulation of banknotes and coins denominated in euro and in escudos; and (II) amendments to the organic law of the Banco de Portugal (CON/2001/1)
Date: 2001-01-26
Institutions: European Central Bank
Subjects: Portugal, issuing of currency, monetary integration, money, national law

EN

OPINION OF THE EUROPEAN CENTRAL BANK

of 26 January 2001

at the request of Portuguese Minister of Finance concerning two draft decree-law concerning

(I) the dual circulation of banknotes and coins denominated in euro and in escudos; and

(II) amendments to the organic law of the Banco de Portugal

(CON/2001/01)

1. 

On 8 January 2001 the European Central Bank (ECB) received a request from the Portuguese

Minister of Finance for an opinion on two draft decree-law concerning (I) the dual circulation of

banknotes and coins denominated in euro and in escudos; and (II) amendments to the organic

law of the Banco de Portugal.

2. 

The ECB’s competence to deliver an opinion is based on the first, second and third indents of

Article 2(1)  of  Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the

European  Central  Bank  by  national  authorities  regarding  draft  legislative  provisions1,  as  the

draft  legislative  proposals  contain  provisions  concerning  currency  matters,  means  of  payment

and the national central bank statute. In accordance with the first sentence of Article 17.5 of the

Rules  of  Procedure  of  the  European  Central  Bank,  this  opinion  has  been  adopted  by  the

Governing Council of the ECB.

3. 

The  first  draft  decree-law  contains  the  provisions  necessary  to implement  into  the  Portuguese

legal  system  Articles  15  and  16  of  Council  Regulation  (EC)  974/98  of  3  May  1998  on  the

introduction  of  the  euro2.  It  deals  with  the  period  during  which  banknotes  and  coins

denominated in escudos remain legal tender by limiting such period to two months after the end

of the transitional period (Articles 1 and 2). This is in line with the common statement on the

introduction of euro banknotes and coins issued by the ECOFIN Council on 8 November 1999

and with the solution adopted by a majority of participating Member States. The ECB  has  no

objections  to  this  solution  and  especially  welcomes  the  measures  adopted  in  the  field  of

exchange  and  withdrawal  of  banknotes  and  coins  denominated  in  escudos  (Articles  3  and  4).

The  exchange  and  withdrawal  of  banknotes  denominated  in  escudos  will  take  place  until

1  OJ L 189, 3.7.1998, pp. 42-43.
2  OJ L 139, 11.5.1998, pp. 1-5.

                                                     
30 June 2002 at the counters of the Banco de Portugal and of credit institutions, and at the local

offices  of  the  tax  authorities,  thus  contributing  in  a  positive  manner  to  a  smoother  cash

changeover. It should be mentioned that whilst credit institutions are entitled to limit the volume

and  frequency  of  exchange  operations,  they  will  have  to  inform  the  Banco  de  Portugal  in

advance  and  will  not  be  allowed  to  establish  such  limits  if  the  Banco  de  Portugal  is  opposed

thereto (Article 3(2)). The same rules are applicable to the exchange and withdrawal of coins,

with the particularity that the Banco de Portugal will accept coins for exchange at its counters

until 31 December 2002 (Article 4).

4. 

Article  5  of  the  draft  decree-law  deals  with  the  automatic  redenomination  of  bank  accounts.

Whilst not legally indispensable in the light of Article 14 of Council Regulation (EC) 974/98,

this  provision  introduces  an  element  of  additional  legal  certainty  in  the  large-scale  operation

involving the redenomination of bank accounts, which cannot be underestimated.

5. 

Article  6  of  the  same  draft  legal  act  establishes  a  free-of-charge  rule  for  the  exchange  and

withdrawal  of  banknotes  and  coins,  and  for  the  redenomination  of  bank  accounts,  that  also

contributes to additional legal certainty and to a smoother cash changeover.

6. 

Article  7(1)  of  the  draft  decree-law  requires  that  only  the  conversion  rate  1  euro  =

200,482 escudos be applied for the exchange and withdrawal of banknotes and coins and for the

redenomination  of  bank  accounts.  The  ECB  has  doubts  about  the  appropriateness  of  this

provision in the light of Articles 14 and 16 of Council Regulation (EC) 974/98, Article 4(3) of

Council  Regulation  (EC)  1103/97  of  17  June  1997  on  certain  provisions  relating  to  the

introduction  of 

the  euro3  and  Article  1  of  Council  Regulation  (EC)  2866/98  of

31 December 1998 on the conversion rates between the euro and the currencies of the Member

States adopting the euro4. Indeed, consistent case-law of the Court of Justice has established that

Member  States  should  not  pass  any  measures  having  the  effect  of  transposing  a  Community

regulation into national legislation. Community regulations are an integral part of the national

legal order and Member States are under the obligation not to introduce any measures that might

affect the uniform interpretation and application of Community law. Converting provisions of a

Community  regulation  into  national  legislation  could  be  deemed  to  affect  the  uniform

interpretation and application of Community law in a field where Member States are unable to

adopt national legislation. However, the ECB understands that these provisions may be intended

for  reasons  of  clarity  and  to  reinforce  the  principle  that  the  exchange  and  withdrawal  of

banknotes and coins and the redenomination of bank accounts should be made without charge

and  without  mark-up  or  commission;  but  would  prefer  the  use  of  a  cross-reference  to  the

applicable provisions of Community law. The same considerations are applicable to Article 7(2)

of the draft decree-law, dealing with rounding on the occasion of the exchange of banknotes and

3  OJ L 162, 19.6.1997, pp. 1-3.
4  OJ L 359, 31.12.1998, pp. 1-2.

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coins and the redenomination of bank accounts. Such rounding rules mirror Article 5 of Council

Regulation (EC) 1103/97, and, as such, would not be legally necessary. However, it is admitted

that such rounding rules would contribute to clarity and legal certainty for the cash changeover

in Portugal and again could contribute to avoiding the imposition of fees or commission in the

exchange and withdrawal of banknotes and coins, and the redenomination of bank accounts. 

7. 

Article 8 grants to the Banco de Portugal regulatory powers to adopt additional provisions that

may prove necessary to implementing the draft decree-law. The ECB has no objections to this

solution  and  notes  that  it  might  prove  extremely  useful  in  order  to  ensure  a  smooth  cash

changeover.  Article  9  deals  with  sanctions  and  infringements  to  the  provisions  of  the  draft

decree-law  and  to  the  regulations  adopted  for  its  implementation  by  the  Banco  de  Portugal

under  the  aforementioned  Article  8.  The  ECB  welcomes  this  provision  as  it  ensures  that

appropriate sanctions will be levied in the case of infringement of the draft decree-law and the

Banco  de  Portugal  regulations  adopted  pursuant  thereof  (‘avisos’),  namely  where  exchange

obligations or the free-of-charge rules are not adhered to.

8. 

Finally, with regard to the wording of Article 10 of the draft decree-law, the ECB would prefer

that, for accounting reasons, a solution in line with the wording of Article 9(2) of the organic

law  of  the  Banco  de  Portugal,  in  the  wording  set  forth  by  decree-law  337/90  of  30  October,

would be used, so that a reference to the accounting treatment of national banknotes that are no

longer legal tender would be maintained.

9. 

The  second  draft  decree-law  dealing  with  amendments  to  the  organic  law  of  the  Banco  de

Portugal  contains  two  sets  of  rules.  On  the  one  hand,  it  covers  the  Banco  de  Portugal

responsibility to issue its own official bulletin (amendments to Article 59) and clarifies the legal

nature  of  the  Banco  de  Portugal  according  to  the  Portuguese  legal  system  (amendments  to

Articles 39 and 64). On the other hand, it introduces in the organic law of the Banco de Portugal

the  necessary  adaptations  to  terminate  the  legal  tender  status  of  banknotes  and  coins

denominated  in  escudos.  Indeed,  the  current  wording  of  Article  65  of  the  organic  law  of  the

Banco de Portugal requires the approval of special legislation in order to repeal Articles 6 to 9

of the organic law in the wording set forth by decree-law 337/90, Those Articles were kept in

force by the said Article 65 as they concern the issuance of banknotes denominated in escudos

which  retained  their  status  as  legal  tender  according  to  Article  9  of  Council  Regulation

(EC) 974/98. The  new  wording  of  Article  65 revokes  those  provisions in  conformity  with  the

termination of the legal tender status of banknotes denominated in escudos5. Only this last set of

rules relating to the cessation of the legal tender status of banknotes and coins denominated in

escudos is relevant for the present opinion, as the other matters are mainly internal in nature.

5 

The new wording of Article 65 of the organic law of Banco de Portugal reads as follows: ‘Notwithstanding the exclusive
powers of the European Central Bank to authorise the issue, Articles 6 to 9 of the organic law of the Banco de Portugal,
as  amended  by  decree-law  No  337/90,  shall  remain  in  force  up  to  28  February  2002,  from  which  date  they  shall  be
deemed revoked’.

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10.  The ECB welcomes the new wording of Article 65 of the organic law of the Banco de Portugal

as it ensures consistency with the provisions of the first draft decree-law on the dual circulation

of banknotes and coins denominated in euro and in escudos, namely with Article 2 of that legal

act; and embodies a necessary legal adaptation to the organic law of the Banco de Portugal in

view of the cessation of the legal tender status of banknotes and coins denominated in escudos.

As a consequence, Article 6(1) of the organic law of the Banco de Portugal law, in the wording

set forth by Law 5/98 of 31 January, will become the only provision in the organic law of the

Banco de Portugal dealing with banknote issuance. In this respect, the opportunity could be used

to update the reference made in Article 6(1) of the organic law of the Banco de Portugal law to

the EC Treaty, as Article 105a was renumbered by the Amsterdam Treaty as Article 106.

11.  The ECB confirms that it has no objection to this opinion being made public by the competent

national authorities at their discretion.

Done at Frankfurt am Main on 26 January 2001.

The President of the ECB

[signed]

Willem F. DUISENBERG

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